Although they tumbled to levels not seen in more than a year-and-a-half, fixed mortgage rates are likely to increase in the next report.
Borrowers closing on 30-year mortgages with fixed rates had an average interest rate of 3.63 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Jan. 22.
Long-term rates
declined 3 basis points from a week earlier and have tumbled from 4.39 percent a year earlier.
In fact, Freddie said 30-year rates were at the lowest level
since the week ended May 23, 2013, when they averaged 3.59 percent.
Frank Nothaft, Freddie’s chief economist,
said, “The drop in energy prices pushed the Producer Price Index down 0.3 percent for December and the Consumer Price Index fell 0.4 percent.”
Thirty-year rates fell to their lowest level on record in the week ended Nov. 21, 2012, when 30-year loans could be had for 3.31 percent.
Mortgage Daily’s analysis of the past week’s bond market activity indicates that fixed rates could be higher in next week’s report. Rates could climb in the range of 6 BPS.
However, only 8 percent of Bankrate.com panelists surveyed for the week Jan. 22 to Jan. 28 expected rates to move up at least 3 BPS. No change was projected by 59 percent, and a third forecasted a decline.
Freddie’s January 2015 Economic and Housing Market Outlook has 30-year rates averaging 3.9 percent in the current quarter, 4.1 percent in the second quarter and 4.3 percent in the third quarter.
Interest rates on jumbo loans were 15 BPS higher than on conforming loans, according to the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended Jan. 16. The jumbo-conforming spread widened from 12 BPS in the previous report.
Freddie reported average 15-year fixed rates at 2.93 percent, 5 BPS better than in the week ended Jan. 15. The spread between rates on 15- and 30-year mortgages was
70 BPS, widening from the prior week’s 68 BPS.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.83 percent in Freddie’s latest survey, 7 BPS less then in the last report.
One-year ARMs averaged 2.37 percent, the same as in Freddie’s prior report.
One-year ARMs averaged 2.54 percent in the week ended Jan. 23, 2014.
Freddie’s economic outlook has one-year ARMs averaging 2.3 percent in the first quarter, 2.4 percent in the following three-month period, and 2.5 percent in the third quarter.
One-year ARMs adjusts based on movement in the one-year Treasury note yield. Department of the Treasury data indicate that the one-year yield closed at 0.17 percent Thursday, up 1 basis point from seven days earlier.
At 0.36 percent as of Wednesday, the six-month London Interbank Offered Rate — or LIBOR — was unchanged from a week prior, according to Bankrate.com..
In its
31st Annual Adjustable-Rate Mortgage Survey of prime loan offerings, Freddie said one-year ARMs have retreated 20 BPS over the past year.
ARM share was 9.5 percent in the most-recent Mortgage Market Index report, wider than 9.2 percent in the prior week’s report.
Freddie forecasts ARM share of 11 in the first-half 2015 and 12 percent in the second half of the year.
